Westland lands £1.4bn merger

Westland, the Somerset-based helicopter maker that came within an ace of bringing down the Thatcher Government in 1986, has finally agreed to merge with its Italian counterpart Agusta in a $2.1bn (£1.4bn) deal.

In a joint statement the two manufacturers' owners, GKN and Italy's Finnmeccanica said: 'This is a world-class alliance of equals united by the same strategic vision - to deliver outstanding products and services to our customers and to maximise value for our shareholders.' The deal was first mooted more than a year ago.

Ownership of the new company, called AgustaWestland, will be shared equally between GKN and Finnmeccanica. In 1999, the two businesses had combined revenues of $2.1bn and a defence order book of $8bn. The Westland businesses last year generated pre-tax profits of £79.9m, while Agusta's surplus before tax was £46.9m.

The company will be chaired by GKN executive director and aerospace head Kevin Smith, while its chief executive is Amedeo Capo-raletti, president and chief executive of Agusta. The managing director is to be the present chief executive of GKN Westland Helicopters, Richard Case.

The merger, which should be completed in the autumn, finally guarantees a 'European solution' for Westland, nearly a decade and a half after the hugely explosive political row about whether its future lay with European or American groupings.

The dispute fallout led the resignations of Michael Heseltine, then Defence Secretary, and Leon Brittain, the Trade and Industry Secretary, and was seen as Margaret Thatcher's gravest crisis.